Future trajectory for a rise is likely to hit precious metals and emerging markets

During the week, gold remained traded with negative bias as traders feared the interest rate hike in the coming month of September. Precious metals remained hesitating to make decisive path amid shifting expectations about the U.S. Federal Reserve’s interest-rate policy, ahead of a closely watched retreat in Jackson Hole, Wyo., where Fed Chairwoman Janet Yellen will speak today.

Since, we know that the US Central bankers are currently in Jackson Hole, Wyoming, for the Federal Reserve’s annual two-day symposium and are anticipating chair Janet Yellen’s speech today. As per the US data, jobless claims ending the week of August 19 came in at 261,000, below the 265,000 forecast and notably, under the psychological 300,000 mark. Furthermore, durable goods in July gained 4.4 percent; as against the expectation of 3.4 percent.

Also the core curable goods excluding transportation orders for the same period picked up 1.5 percent as against 0.4 percent of the expectation. Following the above facts are making a reasonably a good case to consider a rate hike or at least path for highlight.

Hence, any hint or future trajectory for a rise is likely to hit precious metals and emerging markets the hardest. As per the various reports, forecast markets see only one-in-five chance of a September move and do not widely anticipate an increase to the Federal Funds rate till 2017.

We believe markets to take the cues from the much awaited the Fed outcome. If it decide for the rate hike in near term, then we can witness selling pressure in the market towards 8500. However, If it decide to unchanged stance then it can pullback to nearly 200 points likely.

By Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments Pvt. Ltd.